It is Possible to Purchase a Residence with Bitcoin

It is Possible to Purchase a Residence with Bitcoin

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Ever since 2009, when Bitcoin made its first appearance in the crypto world, people have begun to find diverse uses for it. Today, along with other digital currencies, Bitcoin is part of the traditional financial tools. These tools include ATMs, point-of-sale devices, direct payments for diverse services/goods, and loadable debit cards. Some companies, such as Fidelity, have integrated digital assets into retirement benefit accounts. The latest gift is the chance to purchase a home, or take out a housing mortgage, by offering BTC and other cryptocurrencies as collateral. If you are interested in crypto trading, check this app to learn more about crypto mining.

Availing Home Loans Via Digital Currencies

This idea originated in the USA. American banks expect at least a 20% down payment, if a couple/family wishes to acquire a conventional loan to purchase a house. In general, people prefer to use cash. However, if they do not have cash, they may use alternatives, such as diverse types of real estate, business equipment, invoices, blanket liens, inventory, etc. Any of them will suffice for them to avail of a conventional mortgage.

Looking at April 2022, when the scheme got underway, a house cost $392,000. It meant that the couple or family would have to go for a loan worth $78,400 of collateral. True, several firms permitted the usage of crypto assets for loading items at the point-of-sale commerce, and paying for them via debit cards. However, not all companies were in favor of crypto-backed loans. Only some, like Ledn, Milo, Figure Technologies, Abra, etc., displayed positive responses.

Two Reputed Companies are Eager to Grant Crypto-Based Mortgages

The 2014-founded company, Abra, made a recent announcement that it would be offering crypto-backed home loans to investors. Bill Barhydt is the founder of this digital asset trading services. Digital currency wallets have been a hallmark of these services, over the past seven years. Borrowers would have access to the Borrow application. Abra has also partnered with Propy, another well-known company, to enhance the benefits. The partnership’s major aim is to reduce the gap between real estate and crypto. Regarding the interest rates, they would vary, based upon how much crypto would get in as collateral. These rates could go right up to 9.95%.

Milo is another organization offering mortgages that are crypto-backed. It is a start-up, based in Florida. In its very first funding round, the company managed to raise $17 million. This was on March 9, 2022. Other participants, were Metaprop, QED investors, etc. The funding raised hopes.

Milo is comfortable with ETH, BTC, etc., and some Stablecoins. The housing loans are available for 30 years, especially if borrowers desire to garner at least $5 million. Regarding the rates of interest, they could range between 5.95% and 6.95%. Ultimately, Milo wishes to close the gap between the real world and the digital world. In other words, the aim is to bring the real world and the virtual world, closer to one another.

Figure Technologies and Ledn are also keen to get into crypto-backed residential loans. It helped that reputed investors had already contributed around $70 million towards this scheme. Ledn, founded in 2018, invites people to join its waiting list. It is the same with Figure Technologies. This company has $20 million on the platform, for distribution to people seeking loans. The rates of interest could range between 5.99% and  6.018%.

These are but a few organizations, keen on offering crypto-backed, housing mortgages. While they shied away from the idea earlier, now, all seem to want to join the bandwagon. If this trend continues, wherein digital currencies become integrated with traditional financial vehicles, ATMs, debit cards, etc., the concept of purchasing a house with a BTC/some other cryptocurrency loan, will become as common as taking out an ordinary housing mortgage with ordinary cash.

Benefits of Crypto-Backed Mortgages

The biggest benefit is that crypto-backed loans enhance the credibility of digital currencies. They become part of the commercial lending process. In turn, they create more demand, and even ensure that their prices go higher.

The peer-to-peer lending arena, permits the transfer of micro-loans from one hand to another. Not only do they encourage the advent of novel financial possibilities across the globe, but also ensure that benefits accrue to both the parties. The borrowing and lending process initiated between them, is responsible.

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